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Relative Pay of Primary Care and Specialist Physicians

By March 26, 2010Commentary

The Medicare Payment Advisory Commission provides advice to Congress and CMS on major issues in the financial stability of Medicare and other issues affecting quality and cost under the program.  For several years one objective in regard to physician compensation has been to pay more for primary care-type services and de-emphasize payments to specialists.  MedPAC authorized an outside report by researchers at the Urban Institute and the Medical Group Management Association to examine the effect of paying for all services in the United States under the Medicare physician fee schedule.  (MedPAC Report)

The report looked at the MGMA’s salary and productivity survey results and then overlays the Medicare fee schedule to see what the changes in compensation would be.  As an initial matter, the MGMA survey indicates that family medicine, internal medicine and pediatrics physicians average around $190-200,000 a year in take-home income.  Cardiologists and general surgery average about $480,000 and $345,000 respectively.   If all doctors were paid by the Medicare schedule, average hourly compensation would drop about 13% across all specialties, but the impact varies greatly across specialties.  Primary care doctors would see around a 10% decrease, surgeons would see close to 20% decrease.  Nephrologists, rheumatologists, and endocrinologists are about the only specialties that would see an increase.

Most people would probably not begrudge primary care physicians what they are paid, but it is notable how much more highly paid some specialties are.  Those income levels are a significant contributor to the excess cost spent on health care in the United States compared to other developed countries.  It also appears that the changes in the Medicare fee schedule, even if applied to all services by all payers, have done and would do little to change the relative compensation between primary care and specialists.  The theory of improving primary care physician compensation was that it would maintain an adequate supply of primary care doctors and increase the focus on care coordination, would might lower overall health costs.  So far, the Medicare fee schedule changes don’t appear to be achieving that objective.

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